Top EU court says Canada passenger data deal cannot be concluded as is

LUXEMBOURG (Reuters) - An agreement between the European Union and Canada to share airline passenger data that the two sides say is vital to fighting terrorism cannot be concluded in current form as parts of it are not in line with fundamental EU laws, the EU's top court said on Wednesday.

The ruling comes as a blow to governments in Europe who have stepped up their arguments in favor of data retention in the wake of a spate of militant attacks over the past years.

An adviser to the European Court of Justice said in September that the passenger name record (PNR) agreement with Canada, agreed in 2014, needed to be redrafted before it could be signed because it allowed authorities to use the data beyond what is strictly necessary for the prevention and detection of terrorist offences and serious transnational crime.

The EU also has a PNR agreement with the United States as well as an internal one, both of which could face challenges in light of Wednesday's ruling.